BERLIN in Search of ADR Growth MARKET PULSE MARCH 2018

BERLIN In Search of ADR growth MARKET PULSE MARCH 2018

TourisT Arrivals – 2017 AIRPORT PASSENGERS – 2017 Bednights – 2017 conference market – 2017

1.5% yoy 1.3% yoy 0.3% yoy 1.0% yoy 13 million 33 million 31 million 11.7 million attendees

MARKET PROFILE ECONOMIC INDICATORS – GERMANY

24-MONTH With some 3.6 million inhabitants, Berlin is the largest 2017A 2018F city in Germany and regarded as a city of knowledge and FORECAST culture. The city is home to some of the most prominent GDP GROWTH (%) +2.5 +2.4 universities, sporting events, orchestras and museums. The rapidly evolving metropolis enjoys an international reputation for its festivals, contemporary architecture, CPI (%) +1.7 +1.9 nightlife and avant-garde arts. Being a major tourist centre and home to 190 nationalities, Berlin is a focal UNEMPLOYMENT (%) 3.8 3.7 point for individuals who are attracted by its liberal lifestyle, urban eclecticism and artistic freedom. Sources: Economist Intelligence Unit; IMF

TOURISM DEMAND VISITATION Over the past decade, Berlin experienced impressive growth in visitation, airport passengers, hotel supply 14,000 International Domestic and performance. Figures for year-to-November 2017 12,000 indicate a positive trend with a year-on-year increase of 10,000 2.3% in visitation thanks to a significant domestic market 8,000 6,000 accounting for approximately 60%. The city benefits 4,000 from a strong MICE market; however, its largest segment 2,000 is leisure guests. Owing to its strong focus on creative 0 industries, start-ups and the student population, the 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 city’s profile attracts a young and international crowd. Source: Amt für Statistik Berlin-Brandenburg

HOTEL PERFORMANCE KEY METRICS* ɨ Hotels in Berlin record high occupancy levels owing to ɨ 82% strong and constantly growing demand in the leisure €100 80% and meeting & conference segments. Over the past €80 ten years, occupancy grew from 70% to the high 70s 78% €60 in 2017, despite a terrorist attack in December 2016; 76% €40 ɨɨ Meanwhile, Berlin’s average rate performance has 74% been under pressure and remains at the lower end in 72% €20 a Europe-wide comparison, and this dynamic might 70% €0 well continue for the foreseeable future with the 2015 2016 2017 openings of more budget and midscale hotels. Occupancy ADR (€) RevPAR (€)

Source: HVS Research * Branded hotels HOTEL SUPPLY HOTEL PIPELINE Property Rooms Opening Berlin’s hotel bed supply has increased at a compound annual rate of 3.4% since 2009. As of the Meininger Hotel Berlin East Side Gallery 245 Recently Opened end of 2016, Berlin had 535 hotels providing some Motel One Berlin Alexanderplatz 708 Recently Opened 58,000 rooms. The market is geared towards larger B&B Hotel Berlin-Alexanderplatz 163 Recently Opened hotels; properties offering more than 250 rooms Capri By Fraser Berlin 144 Recently Opened made up more than 45% of the market. Merika Hotel 170 March 2018 The city boasts a strong pipeline of new hotel B&B Hotel Berlin Messe 140 March 2018 projects, most of which will fall into the economy to Meininger Hotel Schultheiss Quartier 245 May 2018 midscale segment with significant inventories; the Amano Hotel Friedrichstraße 95 Q3 2018 Motel One Alexanderplatz (708 rooms) and the 245- Hotel Campanile Berlin 60 Q3 2018 room MEININGER Hotel East Side Gallery opened The Ritz-Carlton Berlin (Refurbishment) 303 Q3 2018 in December 2017. Berlin’s hotel supply is expected Hotel Indigo Berlin - City East (Mercedes Benz Arena) 119 Q4 2018 to increase by 10% within the next three years. Hampton by Hilton Berlin (Mercedes Benz Arena) 254 Q4 2018 Future significant openings include the 254-room niu Hide 151 Q4 2018 Hampton by Hilton and the 119-room Hotel Indigo as part of Mercedes Platz, a complex opposite the Holiday Inn Express Berlin City Kurfuerstendamm 177 Q1 2019 Mercedes-Benz Arena; the 95-room Hotel Amano The Student Hotel Berlin 457 Q2 2019 Friedrichstrasse and the 283-room Barcelo Berlin. Amano Hotel Stralauer Allee 200 Q2 2019 Barcelo Berlin 283 Q4 2019 INVESTMENT MARKET Hard Rock Hotel Berlin Checkpoint Charlie 372 On Hold

Berlin’s hotel investment market is rather liquid Source: HVS Research and sought-after with most of the transactions taking place as part of a portfolio, as shown in the HOTEL TRANSACTIONS transactions table. The most recent hotel transaction Estimated Per Room was the purchase of the 78-room Das Stue Hotel by a Property Sale Date Rooms Price (€) (€) private investor, now managed by AccorHotels. The Das Stue Nov 2017 78 Undisclosed transaction of four Motel One hotels over the past Motel One Upper West Nov 2017 580 Portfolio Transaction two years shows the attractiveness of this business Swissotel am Kurfurstendamm Nov 2017 316 Portfolio Transaction model, particularly to German institutional investors. NH Berlin City Ost Oct 2017 99 Portfolio Transaction For the latest value trend, please refer to our annual Holiday Inn Express Anhalter Aug 2017 256 Portfolio Transaction European Hotel Valuation Index, which showed that Motel One am Spittelmarkt Jul 2017 303 43,025,000 142,000 Berlin is the least volatile market in terms of values Hotel Indigo and Hampton by Jul 2017 372 69,900,000 188,000 compared to the other European markets in the Hilton (Mercedes-Platz) survey. Motel One Hauptbahnhof Mar 2017 505 Portfolio Transaction MEININGER Hotel Berlin Central OUTLOOK Mar 2017 296 Portfolio Transaction Station Looking into the future, the hotel pipeline remains Motel One Hackescher Markt Dec 2016 207 Portfolio Transaction strong, putting further pressure on the existing Holiday Inn Alexanderplatz and Mar 2016 395 63,100,000 160,000 hotels’ average rate performance, but also on the Hotel Indigo infrastructure and the airport operation. Hoteliers Meliá Berlin Sep 2015 364 92,500,000 254,000 are eagerly awaiting the opening of the new Andel's by Vienna House Jul 2015 557 105,000,000 189,000 Berlin Brandenburg airport (lately announced for Source: HVS Research 2021), which should help increase the appeal and connectivity of Berlin to international travellers as the city’s tourism is still heavily focused on domestic VALUE TREND visitors. Overall, the outlook for the city is positive, REVPAR CAPITALISATION HOTEL VALUES as it continues to capitalise on its unique personality, RATES and Germany continues to be perceived as one of the safest and most sought-after investment markets in Europe.

Dayk Balyozyan Arlett Hoff, mrics Superior Results through Unrivalled Hospitality Intelligence. Senior Associate Director Everywhere [email protected] [email protected] HVS, the world’s leading consulting and services organisation focused on the hotel, +44 20 7878 7724 +44 20 7878 7753 mixed-use, shared ownership, gaming, and leisure industries, celebrated its 35th HVS London anniversary in 2015. The company performs 4,500+ assignments each year for hotel and real estate owners, operators and developers worldwide. HVS principals are 7-10 Chandos Street regarded as the leading experts in their respective regions of the globe. Through London W1G 9DQ, UK a network of some 50 offices and more than 350 professionals, HVS provides an HVS.com unparalleled range of complementary services for the hospitality industry. HVS.COM